Bender Day 14

Question 1

Equation: EVA

Answer 1

= After Tax Operating Income - (Cost of Capital × Initial Investment)

Question 2

If interest rates have dropped since the bond was purchased what is the bond selling at?

Answer 2

A premium

Question 3

Why would EVA be higher than Residual Income for the same investment?

Answer 3

The cost of capital is less than the hurdle rate

MCQ-07780

Question 4

Equation: Gross Profit

Answer 4

Sales
Less: Beg. Inventory Finished Goods
Plus: COG Manufactured
Less: Ending Inventory Finished Goods
——————-
= Gross Profit

MCQ-07086

Question 5

Name methods used to select a desired rate of return for a capital project

Answer 5

1. WACC
2. Computing discount rate related to a risk specific capital project
3. Assigning a target rate (hurdle rate) for new projects to meet

Note: Payback Period is not a method to be used for desired rate of return on capital projects

MCQ-07803

Question 6

What is not an external factor that affects the competitive environment of a firm?

Answer 6

Political issues - this is an external factor that affects the entire INDUSTRY

MCQ-04066

Question 7

What impacts the optimal level of inventory?

Answer 7

1. Time required to receive inventory
2. Cost per unit of inventory, which has a direct impact on carrying costs
3. Cost of placing an order impacts the frequency of orders

Note: current level of inventory has no effect on Optima Level

MCQ-03525

Question 8

Under Monopolistic Competition, strategic plans focus on:

Answer 8

Maintaining Market Share and planning for enhanced product differentiation

MCQ-03485

Question 9

What is the best productivity ratio for a first line supervisor?

Answer 9

of units per labor hour

The supervisor can control this

MCQ-04200

Question 10

ERM: Governance and Culture

Answer 10

Desired culture
Oversight exercised by the Board
Values commitment
Employees
Structure of Organization

MCQ-04308

Question 11

Quality Analysis: The technique used to determine zero defects and goalpost confidence is ____

Answer 11

Control Chart

MCQ-03875

Question 12

What is included when computing the firms target cash conversation cycle?

Answer 12

1. Days in inventory
2. Days payables outstanding
3. Days Sales in AR

Note: cash discount period is NOT included

MCQ-07011

Question 13

For a company producing more than one product, the sales volume variance can be divided into 2 additional variances?

Answer 13

1. Sales Quantity variance
2. Sales Mix variance

MCQ-04172

Question 14

When can Conversation Cost Pricing be used?

Answer 14

Could be used when the customer furnishes the materials used in manufacturing a product

MCQ-03923